Implementing collaborative logistics

As I mentioned in a previous article a few weeks ago, moving away from the traditional model towards a collaborative logistics model implies a radical change for any company; a change based on the implementation of a collaborative culture. The most important factor to achieving this aim is to build trust, which requires a win / win attitude on behalf of the organization, an attitude oriented to a situation where we all win, not just me.

I recently discussed as well the importance of proactively sharing management data and results as a key aspect for the growth of the supply chain. This model is based on the existence of joint business plans and information sharing as essential collaboration elements. But once the theory and the basic premises of collaborative logistics are settled, we need to ask the big question: how can we implement it?

We can divide the actions into three distinct and progressive groups:

First stage. We carry out a collaborative planning business plan, which should include an initial and final agreement between the partners.

If we take into account that operating in accordance with a collaborative culture requires trustworthy relationships, this first point is essential to establish and build trust between the parties or partners. In this first step is where organizations must establish collaboration rules, define the expectations of both parties and discuss the resources they will invest in this process.

In order to begin this trustworthy relationship and achieve the objectives, it is essential to specify aspects like the real opportunities to optimize the benefits and the performance indicators, and to establish the roles of each partner; among others.

Sharing information and constant communication in each part of the process is the basis of this activity and it allows generating a joint strategy which, in turn, enables to reduce exceptions to the minimum and makes monitoring of the implementation easy.

The second stage relates to sales and ordersforecasts.

Sales forecasts are usually performed by one of the parties, which then informs the other party involved in the process, and this forecast is finally used as a model or guide for the elaboration of another forecast.

To determine which part or partner involved should start the elaboration of the first sales forecast, it is necessary to identify where each organization stands within the supply chain.

Once the former issue has been settled and agreed, it is time to identify and make a list of the exceptions to the sales forecast. In other words, considering the assumptions used to make the forecast, clearly identify how we react in the event of deviation of each of them. When we start a collaborative process, it is especially important to make everything clear and objective, so that in the case the forecasts are not accomplished, the parties do not blame each other.

After completing the sales forecast, the next step is the elaboration of an order forecast. And in this case it is exactly the same as in the sales forecast: we need to indicate in what stage of the process each organization is to determine which part will elaborate it.

Once the scenarios have been set and the parties have agreed on who should prepare the orders forecast, it is time to identify the exceptions to the orders forecast made.

Finally, the last major step is supply.

Depending on the competencies of each party and the conclusions reached in the initial agreement, orders can be generated by the supplier or by the customer. Regardless of these initial agreements, which may vary based on the resources, information systems or other key aspects, it is essential that every order complies with the agreed provisions and that the intention and responsibility of all parties to meet them remain incorruptible.

As a conclusion, it is worth mentioning that the first steps in the implementation of a collaborative model require a high degree of objectivity and transparency. It is especially important to clearly define the initial hypotheses, the performance indicators and a permanent attitude of information exchange. This is the only way to build trust, which is so essential in the early stages. Once the process is underway, everything is easier, but at the beginning we must be careful not to blame each other.